In a Betrand price-setting duopoly model, the equilibrium output:
A)will be equal to the monopoly output.
B)will be equal to the competitive market output.
C)will lie between the monopoly and the competitive market output.
D)will be higher than the monopoly output.

Question

Quizplus · Accepted Answer

In a Bertrand price-setting duopoly model, firms compete by setting prices rather than quantities. The equilibrium outcome tends to be similar to that of a perfectly competitive market, where price equals marginal cost, leading to an output level equivalent to the competitive market output.

In a Betrand Price-Setting Duopoly Model, the Equilibrium Output